The fresh trade data was released at a time of growing concern in Thailand that the strong baht could hurt Thai exporters this year.

On a year-on-year basis, Thai exports rose 13.45 percent in December, significantly below the 21.1 percent gain economists had forecast in a Reuters poll.

The poll had expected an annual rise of more than 20 percent because exports were very weak in December 2011, when severe floods devastated the Thai economy. In November, exports were 26.9 percent above a year earlier.

In a statement on customs-clearance data released on Wednesday, the Commerce Ministry said "protracted problems in Europe have continued to affect Thai exports ... while growth in Japan, China and the United States is still slow."

The ministry said it is keeping its forecast that exports, which grew only 3.12 percent last year, can increase 8-9 percent in 2013.

Amid growing concern about what impact a strong baht might have on exporters, Prime Minister Yingluck Shinawatra on Wednesday met Finance Minister Kittirat Na Ranong and Bank of Thailand Governor Prasarn Trairatvorakul to talk about the currency. This year, the baht has appreciated nearly 3 percent against the dollar, making it emerging Asian's strongest currency.

December's export total was $18.10 billion, or 7.5 percent lower than November's $19.56 billion.

Thailand's imports in December rose 4.67 percent from a year earlier, less than the 5.95 percent increase seen in the Reuters poll. In November, imports soared 24.53 percent.

In December, Thailand had a trade deficit of $2.37 billion, much wider than the forecast $1.33 billion shortfall.

"The speed of recovery in exports remained disappointing," said Usara Wilaipich, senior economist at Standard Chartered in Bangkok.

'Not Yet Recovered'

Pongsak Lothongkam, managing director of SVI, a maker and exporter of electronics to Europe and the U.S., said "Europe has not recovered yet while the United States has showed signs of improvements in the housing market... But the electronics sector follows the consumer market, whose recovery picture is still unclear."

Thailand is a regional hub and export base for top global car makers and the world's number two producer of hard disk drives. Industrial goods account for 65 percent of total exports, which are each year equal to more than 60 percent of the economy.

After meeting her finance minister and the central bank governor, Yingluck said the rise in the baht had not affected exports much at the moment but it would be good to prepare options.

"The baht is unlikely to appreciate much further but nobody can tell what it will do. But today there is no danger sign yet... I don't want people to panic," she told reporters.

On Tuesday, Bank of Thailand Gov. Prasarn said "the central bank is ready to act on unusual volatility in the baht in the short term".

But he repeated that the currency was still moving in line with fundamentals and other regional currencies.

Last week, the governor told Reuters he expected exports to improve in the second half of this year.

For some exporters such as SVI, the stronger baht has little net impact, as they pay in dollars for imported materials that then go into products that are exported.

Usara of Standard Chartered said the export performance indicates that the baht appreciation "is not in line with fundamentals, where the trade account continues to deteriorate due to the still-weak export sector."

She said that the recent rapid baht appreciation "is unlikely to be sustainable."

Could Bad Data Spawn a Rate Cut?

Piyasak Manasorn, economist at Kiatnakin Bank, said that while the trade data is "quite worrisome", it's likely that the Bank of Thailand will not cut interest rates this year, though it might consider a trim if the data trends "persists for one or two months."

On Jan. 9, the central bank's policy committee left the main interest rate unchanged at 2.75 percent for a second straight meeting, citing strong domestic demand and the improved global economic outlook..

However, policy members noted "while tail risk has declined significantly, overall downside risks to the global economy still outweigh the upside risks," according to minutes of the meeting, which came out on Wednesday. [http://www.bot.or.th/Thai/MonetaryPolicy/Documents/MPC_Minutes_12013.pdf ]

Most economists think the policy rate will be on hold for now. The next monetary policy review is Feb. 20.

The ministry's trade data showed shipments to the European Union moved up 2.9 percent in December year-on-year while those to China gained 10.1 percent.

Exports to the U.S. increased 4.6 percent in December and those to Japan rose 3.1 percent.

Shipments to countries in the Association of Southeast Asian Nations (ASEAN), whose economies have been growing, rose 13.1 percent from a year earlier. (Reuters)